Gold Vs. Bitcoin: The Impact of Digital Currency on Gold and The Future of Commodities
Everything is evolving quickly and the same goes for commodities used as the medium of exchange. We have come a long way from gold to cryptocurrency which is commonly known as Digital Gold and it is now making pioneering progress. However, due to a sudden market change, people are confused in deciding which one will hold more importance in the future. But you can clearly understand the scope of them by looking back into history.
Let’s begin with the most precious commodity, gold. It is a valuable medium of exchange as it can be easily transformed into coins, jewelry, bars, or whatnot. Its aesthetic looks and unique characteristics set it apart from other commodities. Further, if we explore its history, societies were built and destroyed just for the sake of gold. It also served a religious purpose in ancient Egypt and now indicates the wealth of the countries.
Considering the history of gold, one thing is notable that it is one of the stable commodities and it’s the only asset that has passed the test of time. Thus, it has been around for centuries which makes it the best choice. It may not produce any income as a return but its stability works very well in the time of economic uncertainty.
It is also important to mention that gold acts as the backbone of every country. It works as a hedge against inflation because every time the fiat currency loses its value, the price of gold skyrockets. The reason is that people think of it as a stable and better value for their money. Plus, research by BullionVault shows that global mining production has faced a decline since 2000 which indicates that prices will hike.
However, gold might have strong characteristics but there’s an alternative in the market which is Bitcoin or more commonly known as Digital Gold. Started from nothing, it gained quick hype as it is the first cryptocurrency that has emerged as the most advanced commodity. One of the reasons due to which it gained attention is that it was the fastest-growing means of exchange in history as it grew from a few dollars to thousands.
Digital Currency or mostly referred to as Bitcoin is being considered a “Digital Commodity” and most of the nations are targeting it. As reported by BBC News, El Salvador has already legalized it as a legal currency. It has become the best investment opportunity but the biggest challenge is that it is volatile. Although, the core reason to develop BTC was to make a currency that can be used without the interaction of banks or the government.
Bitcoin has been given the title of Digital Gold but the question is that does it share any characteristic with the actual gold? Several attributes are common between both commodities like limited supply, medium of exchange, etc. Plus, there are several other characteristics as well that make them unique from each other and simultaneously, confuse people from deciding whether gold will rule as a commodity or Bitcoin will dethrone it.
Bitcoin is rising rapidly and one can simply argue that it will hold great importance in the future. It might have some drawbacks as compared to gold but that doesn’t make it any less valuable. Its quick transactions, low fees, and high-end security make it the best currency to date. A lot of people have started to use Digital Currency. Meanwhile, a few countries have banned cryptocurrency but if the trends continue to grow, then there won’t be an option for them.
Digital Gold might become the new commodity but there’s no way that gold will lose its value. It has been used for centuries and considering its strong attributes, one can simply deduce that it will remain in the market. The majority of people still use it as the best medium of exchange and the current situation indicates that it will continue to do so due to its stability.
On the other hand, Digital Currency is booming in the money market and you can observe that it might not become the actual commodity but it has a huge potential. Plus, it is important to make progress in the market and for that Bitcoin is the ultimate source. So, if you want to prepare for the future and wish to invest in a secure commodity, then gold is the evergreen option, and if it's for speculation, then go for Bitcoin.